Net Sales/Revenues

For the three month period ending January 31, 2020 ("3rd Quarter"), the net sales decreased 21.7%, or $81,076, and decreased 9.6%, or $98,249, during the nine month period ending January 31, 2020, as compared to net sales for the comparative periods ending in 2019. The decrease in sales during the three and nine month periods ending January 31, 2020 is primarily the result of lower HemoTemp®II sales. At January 31, 2020 there were no back orders.

In addition, during the 3rd Quarter the Company had $629 of miscellaneous revenues and $1,889 for the nine month period ending January 31, 2020 primarily from interest income and leasing a portion of its storage space to an unrelated party.





Costs and Expenses

                                    General

The operating expenses of the Company during the 3rd Quarter decreased overall by 2.8%, or $5,261, as compared to the 3rd quarter in 2019. The operating expenses of the Company decreased by 1.9% or $11,163 for the nine month period ending January 31, 2020, as compared to the nine month period ending January 31, 2019, primarily due to a decrease in legal fees and employee health insurance costs.





                                 Cost of Sales

The cost of sales during the 3rdQuarter increased by $849, and increased by $4,778 during the nine month period ending January 31, 2020 as compared to these expenses during the same periods ending in 2019. The increase in the cost of sales during the 3rd Quarter was primarily due to higher freight charge revenues, which are offset against other expenses included in cost of sales. The increase for the nine month period ending January 31, 2020 was due to an increase in the cost of health insurance allocated to manufacturing, higher freight charges and certain raw materials. As a percentage of sales, the cost of sales were 38.2% during the 3rd Quarter, 29.6% for the comparative quarter ending in 2019, and 35.5% during the nine month period ending January 31, 2020 compared to 31.6% in 2019. It is not anticipated that the cost of sales as a percentage of sales will materially change in the near future.





                       Research and Development Expenses

Research and Development costs increased $2,767, or 6.4%, during the 3rd Quarter as compared to the same quarter in 2019. These costs increased by $6,032, or 5.0%, during the nine month period ending January 31, 2020 as compared to the same period in 2019. The overall cost in research and development expense increased during the nine months due to higher employee costs and increased FDA user fees.





                               Marketing Expenses

Marketing expenses for the 3rd Quarter decreased by $200, or .43%, as compared to the quarter ending January 31, 2019. These costs decreased by $2,606, or 1.8%, during the nine month period ending January 31, 2020 as compared to the same period in 2019. The decrease is primarily due to lower health care costs allocated to marketing activities.





                      General and Administrative Expenses

General and administrative costs for the 3rdQuarter decreased by $7,828, or 7.9%, as compared to the 3rd quarter ending January 31, 2019, primarily due to lower legal fees, timing on accounting costs, and employee health care costs. General and administrative costs have decreased overall by $14,589, or 4.6%, during the nine month period ending January 31, 2020, as compared to the same periods in 2019, primarily due to lower legal fees and employee health care costs.





Net Income

The Company realized a net loss of $2,020 during the 3rd Quarter as compared to a net income of $53,364 for the comparative quarter in the prior year primarily due to lower sales during the 3rd quarter. The Company also realized a net income of $23,548 for the nine month period ending January 31, 2020 as compared to a net income of $89,741 during the same period in 2019. This decrease in net income is due to an overall decrease in sales, while the operating expenses of the Company have not materially changed.





Assets/Liabilities



                                    General

Since April 30, 2019, the Company's assets have decreased by $58,879 and liabilities have decreased by $82,427. The overall decrease in assets and liabilities is primarily due to the changes in the accounting treatment for leases, which include amortization of the right of use asset and payments against the lease liability.





                           Related Party Transactions

The Company was owed $19,699 by F.K. Suzuki International, Inc. ("FKSI"), an affiliate, at January 31, 2020 and April 30, 2019. This account primarily represents common expenses which were previously charged by the Company to FKSI for reimbursement. No interest is received or accrued by the Company. Collectability of the amounts due from FKSI since April 30, 2006 could not be assured without the liquidation of all or a portion of its assets, including a portion of its common stock of the Company. As a result, as of April 30, 2006, all of the amount owed by FKSI to the Company was reclassified as a reduction of FKSI's capital in the Company.

A board member provides a variety of legal services to the company in his capacity as a partner in a law firm. Fees for such legal services were approximately $9,216 and $18,341 for the nine months ending January 31, 2020 and 2019 respectively.

Current Assets/Liabilities Ratio

The ratio of current assets to current liabilities, 22.5 to 1, has increased compared to 10.5 to 1 at April 30, 2019 primarily due to higher cash balances and lower accrued liabilities and lower operating lease liability. The Company anticipates the ratio of current assets to current liabilities will remain substantially at its current level as a result of the change in accounting methods, subject to other normal fluctuations. In order to maintain or improve the Company's asset/liabilities ratio, the Company's operations must remain profitable.

Liquidity and Capital Resources

During the nine month period ending January 31, 2020, the Company experienced an increase in working capital of $103,941. This is primarily due to the Company's increase in cash, and lower accrued liabilities and lower operating lease liability.

The Company has attempted to conserve working capital whenever possible. To this end, the Company attempts to keep inventory at minimum levels. The Company believes that it will be able to maintain adequate inventory to supply its customers on a timely basis by careful planning and forecasting demand for its products. However, the Company is nevertheless required to carry a minimum amount of finished inventory and raw materials to meet the delivery requirements of customers and thus, inventory represents a material portion of the Company's investment in current assets.

The Company presently grants payment terms to customers and dealers. Although the Company experiences varying collection periods of its accounts receivable, based on past experience, the Company believes that uncollectable accounts receivable will not have a significant effect on future liquidity.

Cash provided by operating activities was $67,353 during the nine month period ending January 31, 2020. Cash used for investing activities was $962 during this same period. Except for its operating working capital, limited equipment purchases and patent expenses, management is not aware of any other material capital requirements or material contingencies for which it must provide. There were no cash flows from financing activities during the nine month periods ending January 31, 2020 or 2019.

As of January 31, 2020, the Company had $1,668,338 of current assets available. Of this amount, $57,271 was prepaid expenses, $146,112 was inventory, $218,439 was net trade receivables and $1,246,516 was cash. The Company's available cash and cash flow from operations is considered adequate to fund the short-term operating capital needs of the Company. The Company does not have a working line of credit, and does not anticipate obtaining a working line of credit in the near future. There is a risk financing may be necessary to fund long-term capital needs of the Company.

Effects of Inflation. With the exception of inventory and labor costs increasing with inflation, inflation has not had a material effect on the Company's revenues and income from continuing operations in the past three years. Inflation is not expected to have a material effect in the foreseeable future.

Critical Accounting Policies and Estimates. On December 12, 2001, the SEC issued FR-60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies." FR-60 is an intermediate step to alert companies to the need for greater investor awareness of the sensitivity of financial statements to the methods, assumptions, and estimates underlying their preparation, including the judgments and uncertainties affecting the application of those policies and the likelihood that materially different amounts would be reported under different conditions or using different assumptions.

The Company's significant accounting policies are disclosed in Note 2 to the Financial Statements for the 3rd Quarter. See "Financial Statements." Except as noted below, the impact on the Company's financial position or results of operation would not have been materially different had the Company reported under different conditions or used different assumptions. The policies which may have materially affected the financial position and results of operations of the Company if such information had been reported under different circumstances or assumptions are:

Use of Estimates - preparation of financial statements and conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. The financial condition of the Company and results of operations may differ from the estimates and assumptions made by management in preparation of the Financial Statements accompanying this report.

Allowance for Bad Debts - The Company periodically performs credit evaluations of its customers and generally does not require collateral to support amounts due from the sale of its products. The Company maintains an allowance for doubtful accounts based on its best estimate of collectability of accounts receivable.





Forward-Looking Statements

This report may contain statements which, to the extent they are not recitations of historical fact, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve risks and uncertainties. Actual results may differ materially from such forward-looking statements for reasons including, but not limited to, changes to and developments in the legislative and regulatory environments effecting the Company's business, the impact of competitive products and services, changes in the medical and laboratory industries caused by various factors, risks inherit in marketing new products, as well as other factors as set forth in this report. Thus, such forward-looking statements should not be relied upon to indicate the actual results which might be obtained by the Company. No representation or warranty of any kind is given with respect to the accuracy of such forward-looking information. The forward-looking information has been prepared by the management of the Company and has not been reviewed or compiled by independent public accountants.

© Edgar Online, source Glimpses